China’s National Innovation System: Learning from a Holistic, National Approach to Innovation

By Eric Kennedy,

This post has been updated from its previous version.

Conversations about innovation in the United States are rife with the adversarial language of exceptionalism. Take, for example, a recent article by Gary Shapiro, the CEO of the Consumer Electronics Association, in Forbes. In his eyes, America’s success as an innovation powerhouse can be traced to a “can-do attitude” that “treats failure as a learning experience,” a free and democratic society that “rewards savvy risk takers,” and an educational system that pushes students to question, not memorize. In a move that would make Steve Jobs proud, never once is any involvement in innovation by the federal government mentioned – American successes come from these exceptional Americans. By contrast, “the Chinese have a long tradition of copying others, not… having a culture that even recognizes [intellectual property], and a bias towards conformism.”

To adopt this popular but simplistic narrative – that China represents an IP thief or parasitic drain on the innovative work of American firms – is to miss a far richer and more nuanced understanding of China’s national innovation system. Yet, even purportedly objective analyses by organizations like the U.S. Chamber of Commerce do little to move beyond these sentiments. By turning to the Chinese National Medium- and Long-Term Program for Science and Technology Development (2006-2020) and considering it in light of an American Chamber of Commerce analysis of Chinese innovation (China’s Drive for ‘Indigenous Innovation’), a potentially more interesting story can be told. Indeed, what’s revealed are different underlying conceptions of why and how innovation ought to be pursued, and the competition that emerges when we react before seeking to understand the underlying values and knowledge systems.

In essence, China’s National Innovation System (NIS) frames innovation in a far more holistic and nationally coordinated way than is often ascribed to the American approach. Despite the fact that China is often framed as playing “catch up” to the American model, it ought to be explored in its own right before such value judgments are made. Doing so doesn’t preclude critical examination of either system. Rather, it allows lessons to be gained by both actors, potentially moving us towards a more collaborative and empathetic understanding of innovation ecosystems across the Pacific.

Role of Innovation

In the American and Chinese system alike, innovation is pursued for a number of motivates. Innovation can be a tool for economic development, increasing the prosperity of a region or nation, and securing jobs in the face of global competition. The creation of new products – measured relatively poorly through the proxy of patents or anecdotal examples of widely regarded innovators like Steve Jobs and Apple – seems central in this process, feeding a larger network of employment in the production, distribution, and sales of these devices. In other word, innovation plays an instrumental role in achieving prosperity in an economic lens.

It’s easy to see how this definition of innovation leads to the kind of zero-sum language present in popular and government analysis alike surrounding the rise of China. In Forbes, Shapiro paints a vivid picture of how America could find itself “eclipsed by the Chinese juggernaut” if it fails to actively maintain its lead in domestic innovation. Similar rhetoric is pointed even more explicitly towards seeing China’s rise as incongruent with maintaining American innovation superiority in the report by the U.S. Chamber of Commerce. Repeatedly citing fears that China’s innovation rests simply on thievery of Western innovations, the report suggests that in the eyes of many American companies, the “pretense of [Chinese] goodwill is gone… [a] win-win in China means China wins twice” (p. 6).

Yet, if this zero-sum innovation mentality is suspended for a moment, the central Chinese innovation policy document reveals very different underlying visions. The National Outline for Medium- and Long-Term Science and Technology Development (or simply the National Outline) presents a vision of innovation that is arguably far more concerned with responding to domestic societal challenges than achieving international superiority. Indeed, this aligns with China’s strong inclination towards domestically focused, non-interventionist politics – a position that is widely acknowledged when it is seen in relation to global conflict (e.g., vetoing United Nations involvement in Syria) but is usually promptly forgotten regarding national innovation policy. In the face of widespread poverty, ongoing political instability, and the ever-present threat of social discontent, the Chinese government is understandably primarily concerned with the impact of its policies domestically.

This manifests itself in rhetoric that is surprisingly open and aware of a wide array of Chinese problems in the National Outline. Even in the Preface, the policy is motivated by these concerns:

“The nation’s economic growth shows an excessive dependence on the consumption of energy and resources, with high associated environmental costs; the economic structure is irrational, characterized by a frailagricultural base and lagging high-tech industry and modern service industry; and firms lack core competitiveness and their economic returns are yet to be improved as a result ofweak indigenous innovation capability. There are a whole range of problems concerning employment, distribution, health care, and national security that need prompt solution.” (p. 8)

Subsequent pages go on to highlight the “irrational energy structure and …severe environmental problems” (p. 14). In the Communist Party’s own words, “the country is confronted with serious environmental pollution problems, with an increasingly degraded ecosystem and a weak capability of handling pollutants” (p. 17). In fact, a touchstone of the policy becomes the “irrational” nature of the country’s economy (p. 8), investment structure for science and technology (p. 59), energy system (p. 14), and agricultural systems (p. 19). For a country generally accused of portraying only its successes to the broader world, this is a markedly humble way of motivating a national innovation system.

This focus on social, environmental, and development problems results in an innovation system that has a far different set of explicit goals than its American counterpart. The National Outline conceives of innovation as a powerful force for directly improving quality of life – not simply increasing average economic prosperity, but delivering tangible services, resources, and opportunities to the people. Priority areas for the national innovation system were selected in light of four principles, including “topics that are desirable for addressing major public good science and technology issues and raising the capability in providing public services” (p. 13). In fact, half of the eight science and technological focus areas and 60% of the priority areas (energy, environment, agriculture, transportation, population & health, and urbanization & city development) are explicitly focused on these social outcomes.

To get a taste of just how socially focused the agenda is, turn to any of one of these six sections. Priority topics in the population and health section, for instance, read as though straight from the National Institutes of Health objectives.

“(48) Prevention and treatment of cardiovascular and cerebrovascular diseases, malignancies, and other major non-infectious diseases. Priorities will be given to developing key technologies for early warning and diagnosis of major diseases, including cardiovascular and cerebrovascular diseases and tumors, and for early intervention in disease risk factors while developing key technologies and solutions for standardized, individualized and integrated treatment.” (p. 27)

In commitments to preventing sexually transmitted diseases, developing mobile medical equipment to serve rural communities, and encouraging innovation in integrating Traditional Chinese Medicine in modern treatment regimes (p. 27-28), the rhetoric of these ambitions aligns with western social values (and occasionally even more liberal than found in the U.S.!). As these kinds of repeated examples show, the Chinese national innovation system is conceptualized as a tool for achieving large-scale social improvements by innovating complex social systems, not simply producing commercializable gadgets.

That said, it is certainly important not to paint an overly naïve picture of China’s innovation ambitions. Coupled with these public-service oriented goals is also an explicit and implicit realization that innovation is important for competitiveness. In the eyes of the Chinese leaders, “building an innovation-oriented country is… a major strategic choice for China’s future development” (p. 9). National security concerns and ambitions of achieving a competitive degree of innovation relative to the western world are strongly present throughout the agenda as well, particularly in later sections focusing on “Major Special Projects” and “Frontier Technologies.” These sections in specific, though, overtly reference the example of America and other western nations in developing major technological innovation projects as rallying points, and seek to capitalize on a proven and effective model rather than compete on the same projects. In all of the sections, China sees an active government role in producing these innovation outcomes.

Government’s Role in the National Innovation System

The National Outline concludes with three sections on how to go about achieving these objectives. The first is focused on major national policies and measures, ranging from taxation to intellectual property regimes, and from “re-innovating” imported technologies (p. 54) to addressing cultural factors. Even here, though, many of the moves seem quite amenable to cooperation, including expanding international science and technology exchanges (p. 57), increasing scientific and cultural literacy nationwide (p. 58), and moving military functions to a more civilian structure (p. 57). The second section focuses explicitly on creating nation-wide structures conducive to innovation, ranging from building experimental facilities to sharing data more widely (including even a complete repository of plant, animal, and fossil knowledge and data).

One reason why this is so striking is because it recognizes the centrality of government support in developing a national innovation strategy. As I have argued elsewhere, Americans have a tendency to downplay the role of government in their innovation success. Take, for example, the way in which Obama’s apt comments that “Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that” was taken as an insult by many conservatives, or Steve Jobs’ tendency to view himself and his work as entirely self-made. In the National Outline, the Chinese government is simply forthcoming about playing a very active role in the innovation agenda.

Criticisms of the Chinese plan have occurred at multiple levels. Some focus on this active role of government itself, citing the “elaborate web of policies and implementation tools and surging government science and technology spending – topping $130 billion this year, according to the National Bureau of Statistics” (Chamber of Commerce, p. 4) that can be achieved under an authoritarian regime. Put even more crassly in Forbes magazine,

“Clearly authoritarian regimes (which have shown the willingness to use force in the past) are very different from free, democratic societies. Democracy and freedom aren’t conducive to asserting governmental will. When the Chinese government decides to do something, it just does it. They don’t have a free press, or thousands of interest groups and a million lawyers attacking them. Their totalitarian heritage has allowed them to complete government goals without a set of checks and balances in place.”

Yet, these reactionary critiques fail to acknowledge that, despite myths of individualistic success, the US government intentionally supports an active national innovation agenda. While it may indeed be somewhat more moderated by the presence of a free press and more civilian control, for instance, the at least $140 billion spent on science and technology research and development represents a national commitment to maintaining competitiveness.

Alternative critiques have focused in particularly on national intellectual property regimes. In the Chamber of Commerce report, for instance, criticism is leveled for the use of “domestic patents to retaliate against foreign companies which file intellectual property infringement lawsuits offshore that stymie the international expansion plans of Chinese companies” (p. 26). This is a more concerning trend, as free and open international trade is built on trust and stability. If companies, whether Chinese, American, or otherwise, become hindered by protectionist patent regimes when trying to conduct international business, nations, companies, and consumers alike will suffer because of the unpredictability and diminished quality. Yet, here too symmetry must be maintained – for every American firm looking to expand into China, a Chinese firm likely feels protected against in trying to expand into the United States. Increasingly, the national innovation system cannot be seen as ending at a nation’s borders. Rather, innovation must be conceived of as a global phenomenon, with all the complexity and collaboration that results.

Conclusion

This global push towards innovation brings new challenges to foreign relations. It represents, in many ways, the same kind of sabre rattling and competition that has previously been the domain of armed conflict. In an innovation-based world – particularly one conceived of as a zero-sum game, where another nation’s advances mean your losses – there will always be a fight to be seen as “the best” innovator so as to drive “the strongest” economy. Even in an ostensibly collaborative conclusion, for instance, the Chamber of Commerce report continues to lambast the failures of adopting communism (p. 38), pontificates about the nation’s upcoming failures, and criticizes the “resentful nationalism” that “impedes China’s ability to emerge as a true global economic and political leader” (p. 37). Yet, the label of resentful nationalism may fit equally well for the Chamber’s analysis, given the competitive, zero-sum, antagonistic language and narrative present throughout.

Indeed, perhaps it is worth asking – even if only for a moment – whether lessons can be taken from the Chinese national innovation system. I would argue strongly in the affirmative. The Chinese National Outline shows a vision for innovation not simply as a good in its own right, but for improving the conditions of its people. Despite the frequent linear model of science and technology in this analysis, this motivation for innovating – and this holistic sense of innovation as including social, ecological, and health systems as priorities – is laudable. It offers an alternative to innovation as simply nationalistic one-upmanship, a lesson that perhaps needs to be relearned by the West as new countries emerge as capable of generating bright ideas. Furthermore, it offers a surprisingly open assessment of the degree to which the government is involved in innovation, a counterpoint to the mythologized individualism of American invention. These involvements ought to rightly be critiqued, but should be on the basis of policy rather than anti-communism or anti-China ideology. Finally, the National Outline offers a surprisingly humble self-assessment of the problems facing China. Trust and collaboration could be garnered by putting down the swords, admitting our own challenges, and beginning a dialogue towards learning from each other on these issues of social importance. China and its innovation system are by no means perfect, but they offer an interesting, insightful, and informative contrast to American assumptions that could lead to more stable international relationships if learned from instead of reacted to.